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Bitcoin under pressure below $60,000 as Japanese yen hits 40-year low against the U.S. dollar
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- DeepHorus
Bitcoin fell below $60,000 on Wednesday as the Japanese yen plunged to its weakest level against the U.S. dollar in nearly four decades, strengthening the greenback and putting pressure on risk assets. The leading cryptocurrency traded at around $59,800, dropping more than 1% in Asian trading hours, and remained below its 200-week simple moving average—a key technical indicator watched by traders. The yen's slide to 162.40 per dollar, its lowest since October 1986, stemmed from starkly divergent interest rates between the U.S. Federal Reserve and the Bank of Japan, lifting the Dollar Index to 101.32.
The yen's sustained weakness has been fueled by the Fed's aggressive rate hikes to above 5% while the BOJ kept rates near zero, only recently raising its policy rate to around 1%. This gap has made the yen a popular funding currency for carry trades, where investors borrow cheaply in yen to invest in higher-yielding assets worldwide. Since 2021, the yen has declined roughly 57% against the dollar, exacerbating concerns about a disorderly unwinding of these trades that could roil global markets, including stocks, bonds, and cryptocurrencies.
Adding to Bitcoin's woes, Strategy—the world's largest publicly listed Bitcoin holder—authorized plans to sell over $1 billion worth of BTC as part of a $1.25 billion "monetization program." This marks a sharp pivot from founder Michael Saylor's longstanding mantra of "never sell your bitcoin." The move comes as Strategy's preferred stock, STRC, has cratered in recent weeks, weakening a key funding channel for future Bitcoin purchases.
Market observers have expressed skepticism about Strategy's shift. Jeff Dorman, CIO of Arca, commented on X that "the can has been kicked down the road for a year or two," warning that cap structure trades will resurface unless Bitcoin rallies significantly. He added that Saylor may create more unforced errors, such as paying down debt that led to enterprise value destruction. The potential sale of billions in BTC could further pressure an already fragile market.
The yen's trajectory remains a critical factor. Japan's debt-to-GDP ratio exceeding 220% limits the BOJ's ability to hike rates aggressively without sparking a fiscal crisis. For now, Japanese officials rely on verbal warnings to stem the yen's slide, while the BOJ's hawkish stance remains largely on paper. Analysts warn that eventual forceful action by the BOJ could trigger a mass unwinding of carry trades, causing volatility across asset classes, including crypto.
Looking ahead, Bitcoin's ability to reclaim the $60,000 level and its 200-week moving average will depend on macro factors, particularly yen dynamics and the Fed's policy path. The convergence of Strategy's sell-off plans and yen-driven dollar strength creates a challenging environment for cryptocurrencies. Investors are closely watching for any signs of intervention from Japanese authorities, which could quickly reverse the dollar's gains and provide relief to risk assets like Bitcoin.
